Month: May 2011

By Ulli G. Niemann

With the internet such a huge part of our daily lives, many investors have access to a wide range of instant investment information.

Whether you’re into stocks, bonds, mutual funds, futures or options, there are tons of electronic investment newsletters offering to turn your small stake into a giant fortune. All you need to do is subscribe and watch your portfolio soar.

Yeah, right!

As a practicing investment advisor specializing in no load mutual funds, I have received my share of e-mails from disillusioned subscribers wanting to know how to better evaluate newsletter services.

While there are no absolutes, I can give you a few pointers that might help you make a better decision:

1. Stay away from the most obvious hype. Ads promising to turn your $10,000 into $1 million in 2 years by buying this incredible stock or hot commodity are not promoting investing – they are selling gambling. Follow the “If it sounds too good to be true, it usually is” rule.

2. Most mutual fund newsletters won’t make those outlandish claims, but some of them are still pushing the truth as far as they can. So try to get a free issue or two to examine. If you can’t get a sample, check if they have a trial period? How about a money back guarantee? If not, pay with your credit card. These days you’re pretty well protected by this payment method even if the newsletter doesn’t offer a satisfaction guarantee.

3. Consider the editor as well as the disclaimer notes. Is he or she only publishing a newsletter? Or is he also an investment advisor with a practice?

Why would that last point matter? I may be biased, but I believe that you get far better advice from a writer who also is in the trenches every day investing their own as well as their clients’ portfolios. They would have far better insights as to what works and what doesn’t than someone who has the theory down but no practical experience.

4. Look at the investment recommendations. Are they suggesting you buy into a certain orientation such as mid cap, small cap or large value? Or are they picking specific investments based on a variety of technical indicators?

In my no-load mutual fund practice I use specific recommendations, even for my free newsletter subscribers. They are first based on my trend tracking indicator giving us the green light and secondarily on the selection of mutual funds based on momentum analysis.

The more specific the recommendations, the better, because that allows you to follow along either just on paper (which you should do at first) or with your actual portfolio.

5. Are they recommending when to sell a mutual fund either because of gains or to limit your losses? This to me is the most important issue. If there is no plan in place for getting out, how will you ever know when to sell? This has been the greatest downfall of most publishers (and investors!) since the bear market of 2000 – not selling even if market conditions dictate it would be in your best interest to do so.

The advice of most newsletter services can make you money in bull markets. However, with the continuation of the bear market still a distinct possibility, be sure to look at any newsletter’s investment advice record since 2000.

For many people investing is an emotional issue. The pendulum swings between fear of loss and greed for greater returns. If a complete methodology for buying and selling is offered in a newsletter, such as one I advocate, be sure that it fits your emotional make up.

There is no sense in following an investment approach, which may have merits, if it means sleepless nights for you. You won’t stick with it for the long term – and long-term investing is essential for making your portfolio grow and prosper.

So, the bottom line is to look for a newsletter that:

• does not promise the moon,
• has a track record through up and down markets, and
• recommends an approach that not only is compatible for your investment style but also has an exit strategy so you can capitalize on your gains — in the bank, not only on paper.

American cartoonist and inventor Rube Goldberg was famous for turning the simple into the mind-numbingly complex. He invented hysterically absurd systems for doing the simplest tasks. Take, for example, the “self-operating napkin”:

“The “Self-Operating Napkin” is activated when the soup spoon (A) is raised to mouth, pulling string (B) and thereby jerking ladle (C) which throws cracker (D) past parrot (E). Parrot jumps after cracker and perch (F) tilts, upsetting seeds (G) into pail (H). Extra weight in pail pulls cord (I), which opens and lights automatic cigar lighter (J), setting off skyrocket (K) which causes sickle (L) to cut string (M) and allow pendulum with attached napkin to swing back and forth, thereby wiping chin.”

Thirteen steps to wipe your mouth. Pretty ridiculous, huh?

Still, you’d be surprised by how many entrepreneurs fall victim to something similar. They think that by implementing a complex, detailed strategy, they’re moving toward success. They think a successful business needs to be a more intricate one.

But more moving parts do not necessarily make a business better. In fact, adding more and more complexity makes accomplishing your goals more challenging, more time-consuming, and more resource-draining.

Albert Einstein once said: “Everything should be made as simple as possible, but not simpler.”

The flip side of that your business should be as complex as it needs to be – but no more. In fact, the simpler your strategies at the outset, the better. I’ll explain why in just a minute.

The Allure of the Complex

Have you ever been to a magic shop? The guy behind the counter will invariably show you a trick. It’ll amaze you. Astound you! You absolutely have to know how it’s done. So you buy it and drive home, all the while thinking how incredible the illusion is and how cool it’ll be to wow your friends.

But when you get home and pull out the instructions, you discover how simple the trick really is. You think to yourself, “How in the world could this fool anybody?”

But it fooled you at the magic shop.

In business, as with magic tricks, complexity is all about tactics – “How” to execute a strategy. And tactics must always be secondary. You must understand “What” you’re trying to do before “How.”

When you’re considering a strategy to implement, the key is to start out as simply as possible. Ask yourself, “What’s the easiest, fastest, cheapest, simplest way to know if this project is even worth pursuing in the first place?

The Dangers of Adding vs. Subtracting

When you fall in the love with the complex, you run the risk of spending more time learning than earning. Building knowledge instead of your business. Analyzing instead of taking action. It means more work, more hours spent strategizing and developing, and making less progress toward your goal. No matter how much efficiency you think it may add, no matter how much you may think it saves you, complexity always adds to your bottom line costs.

The more complex things are in your business, the more sluggish you are at getting things done. When you work on your own, you can usually get things done relatively quickly. The bigger your organization, the more people you have to wait for before moving forward. It’s not necessarily bad, but it is reality.

And there’s another threat. When you focus obsessively on creating a bigger and more complex system, you naturally shift your focus from your goal to the path to achieve it. You start focusing on the “How” instead of the “What.” It misdirects all your efforts and resources.

That undermines your business at every level. How can you possibly achieve a goal when your efforts aren’t directed toward it? When you’re obsession becomes building a massive system instead of a massively profitable business?

The bottom line here is that building a successful business is all about speed. Speed to create products, speed to get them to market, speed to get feedback and analyze results, and then – and only then – the speed to leverage what’s working into a profit center.

Complexity kills speed.

Are You in Love With the Complex?

Ask yourself this:

“In an effort to make my business more productive, am I more likely to add more steps or options to it or am I more likely to strip something out of it?”

Most people will likely answer “add” to that question. For one simple reason. It’s far easier to add than it is to take away.

Take a hard look at the actions you’ve taken in the past. Beyond the start-up, how big has your business grown? Not in terms of revenue and customers but in terms of tasks and workload.

If you’re honest with yourself, you’ll find your answer right there.

It’s counterintuitive, but many entrepreneurs have the delusion that the bigger, the more complex a business is, the more successful it is.

But the more complex anything is… the more complex it is. Period. More complex does not mean better. What more complex does mean is more demanding.

In a nutshell, complexity slows your progress, and progress is far more important than perfection.

How to Break That Dangerous Attraction

Fixing the problem starts with asking yourself two questions whenever you’re considering a new project.

Question #1: What is the absolute minimum I need to achieve my goals with this project?

Be thorough. Include everything that applies. Things like “product development” and “marketing and lead generation” and “conversion and fulfillment.”

Question #2: “How can I offer my prospects a ‘duct-taped’ version first?”

You don’t want to roll out a slick, polished product only to watch it fail. So what can you “duct tape” together first? What’s the minimum you can give your prospects that will deliver your message and bring you solid, quantifiable feedback?

By focusing your efforts in this way, you’ll see a vast improvement in the performance of your business – no matter what level it’s at.

If you’re working on your own, you’ll be more productive and have more time for other business-building projects. If you’re working with a team, you’ll find they become more productive as well. Efficiency goes up and costs go down as you eliminate the unnecessary actions you were previously supporting.

[Ed. Note: Rich Schefren, founder of Strategic Profits, is offering a new course for struggling online entrepreneurs. It outlines the same strategies that his first 25 coaching clients used to bring in a total of $142 million in two years. And Rich used those strategies himself to bring in $7 million in sales at Strategic Profits – in just 18 months.

There are only 100 FREE spots available for this online course, “7 Steps That Quickly Create Online Businesses With Unstoppable Income.” So register now.]

This article appears courtesy of Early To Rise, a free newsletter dedicated to creating wealth and success through inspiration and practical, proven advice. For a complimentary subscription, visit http://www.earlytorise.com.

For the first time since the depth of the European debt crisis first came to light, officials are now openly discussing the possibility of debt restructuring as part of the solution. Jean-Claude Juncker who presides over the Eurogroup consisting of finance ministers from the seventeen Eurozone members, slammed the rumor mill into top gear Tuesday when he said some form of restructuring of Greece’s debt was likely.

Juncker did note that Greece was expected to first pay down its debt by about fifty billion euros (US$70.6 billion). Once this requirement has been met however, Juncker said it was possible that the remaining debt could be restructured in a way to reduce Greece’s burden in paying back the rest of the debt.

Note however, that Juncker is not suggesting a deal that would forgive any of Greece’s outstanding debt. Rather, Juncker gave rise to the possibility of delaying payment as some securities reach maturity. Greek officials confirmed they may seek this option with Labor Minister Louka Katseli suggesting it could be possible to delay payment for some government-issued securities but only for those debt-holders open to the idea.

This approach is actually known as “re-profiling” and involves swapping short-term debt for longer-dated securities. The change in the maturity date results in a revision (i.e. “re-profiling”) of the yield curve for the securities and when conducted with the permission of the debt holder, re-profiling is not considered a credit even or a default on the original debt.

This “soft restructuring” as it was described by Greece’s Deputy Foreign Minister, is intended to differentiate between a complete abdication of debt and responsibilities and simply easing the conditions by which the debt must be repaid. Despite this, French Economy Minister Christine Lagarde was quick to voice opposition to any form of Greek debt restructuring. Lagard said that any action that could potentially harm the value of the euro was unacceptable.

Legarde’s hostility can be partly explained by the implications a re-profiling of Greece’s debt could have on other troubled Eurozone economies. Keep in mind that Greece was the first to accept a bail-out when it received 110 billion euros (US$155.5 billion) early last year; Ireland soon followed suite, and earlier this week, it was announced that Portugal would be provided with 78 billion euros (US$110.2 billion) in emergency funding. Does this mean we can expect these countries to also consider restructuring / re-profiling to deal with their debt burdens?

Finally, Juncker took great care to communicate that he did not foresee a “larger” restructuring that would presumably include an investor haircut. For now at least, it appears that some investors may be asked to delay payout, but investor assets appear free from the threat of a reduced payment.

Scott Boyd is a currency analyst and a regular contributor to the OANDA MarketPulse FX blog

Note from Managing Editor Sara Nunnally: One of the most common myths about currency trading is that you need a huge trading account. This might have been true five or 10 years ago. But there are many new foreign exchange products out there that give you access to a lot of currencies…

And you don’t have to be a “high roller” to participate.

The stock market and commodities have been wild. Lots of ups and downs. This could be driving some investors to look at other markets — like foreign exchange, or forex.

But many people think the Forex currency market is out of their reach. It’s not. In this week’s guest editorial, Michael Sankowski will show you how you can trade currencies with a small account. If you’ve ever considered trading currencies, or even if you’ve been curious about how this market works, this article will open your eyes…

Michael Sankowski is the editor of Currency Profits Trader. He guides thousands of subscribers through the Forex currency markets. I hope you’ll find this article intriguing…

How to Easily Trade Currencies — On Any Budget

I’ve been looking for a series of products that I can recommend to my readers. I wanted Forex products that will allow them to trade in the size that is appropriate for their account size.

I am always looking for ways to give the most advanced and cutting-edge information directly to you. And I think I’ve finally found the right products for new traders in the Forex currency markets — or for traders who have an account under $20,000 in size.

I recently wrote a special report about leverage. I recommend you read that report — because there is magic in leverage. It can make your account blossom in a matter of months — seemingly like magic.

The combination of properly sized contracts and the ability to use leverage properly is probably the most important information about trading you can possess. Every great trader is able to trade in a size that is appropriate to their overall account and allows them to increase their size if the trade is moving in their favor.

The New Forex Products: Perfect for Small Accounts

It is hard to find products that are good for people who are just starting to trade, or for people with accounts that are below $20,000. If you fit into either of these two groups, then these new Forex products will allow you to use advanced currency trading techniques.

You’ll be able to control how much you risk with pinpoint accuracy. You’ll be able to decide exactly how much to risk. You’ll be able to trade like the experts — with a fraction of their capital.

We’ve all heard the phrase “Teach a man to fish, and feed him for a lifetime.” The problem in the Forex currency markets is that all of the fish are whales. Teaching someone how to catch a whale doesn’t really help much unless he also happens to have a whale-sized account.

These new products turn the tables on the big Forex speculators. With these new smaller-sized products, nearly anyone can afford to access the markets.

(Sign up for Smart Investing Daily and let regular editors Sara Nunnally and Jared Levy simplify the market for you with their easy-to-understand articles.)

Currency Trading Small Is the Path to Big Profits

I am going to tell you right now the two most important questions to ask about any trade you will ever make!

The questions aren’t complex, and getting the answers right doesn’t require a Ph.D. in Astrophysics. Simply asking these questions will put you light years ahead of most traders. Here they are:

Question No. 1: How much risk should I take on this trade?
Question No. 2: What is my risk on this trade?

If you ask and can answer each of these questions, you will be a far more successful trader. I’ll teach you how to answer these questions. Part of the answer to the questions is knowing exactly which products to trade for your account size.

Question No. 1: How much risk should I take on this trade?

So, Big Shooter — do you want to risk 100% of your account on just one trade? How about 70% of your account? Of course not!

Risking all of your trading capital on one or two trades is foolish. It would be like spending your entire net worth on lottery tickets — you’ll probably lose everything you own.

The top traders never risk more than a few percent of their account on a single trade. I know this sounds almost too small to make money, but it is true. If you are risking more than 5% of your account on a single trade, you are risking too much. And as your account gets bigger, you’ll be risking less than 5% of your account on single trades!

I want to be 100% clear — learning to trade smaller is the path to big profits.

When you have a small account, or if you are a new trader, it is hard to find products that will let you take just a little bit of risk. I am making this simple for you by showing you the exact products you’ll need to use to be able to trade “only” 5% at a time.

Here is a handy table that shows the amount you should risk on any trade for different account sizes:

Many top traders have started with risking 5% or so on a single trade, but as their account grows, they take less and less risk per trade. I highly recommend you follow their example. As your account grows, risk less of your account per trade.

Question No. 2: What is my risk on this trade?

For Question No. 1, we answered how much risk you should take with each trade in relation to your account. Now we need to figure out how much risk is in an individual trade. We want to match the amount of risk we should take in relation to our account with the amount of risk taken on any individual trade.

For example, let’s say you are trading Wal-Mart stock. How much risk are you taking if you let the stock move against you $1 before you get out? You might say, “Not that much, it is only $1.” Well, what if you had 20 million shares of Wal-Mart? Suddenly, that “only $1” movement is worth $20 million! That’s a lot of risk!

Clearly, we need to know more than just how much the market is going to move. We also need to know how much position we have on. This idea is the same for the FX market. The amount of risk we are taking is directly related to the amount of FX we trade for an individual trade.

Here is the math — if you are so inclined: Your risk is:

Market movement * Position Size

In the currency markets, this is easy to figure out. Some people call the amount that you trade your exposure. But in any case, the amount of risk you are taking is directly related to both the amount you trade, and how much the individual product moves.

And this is why I am introducing these new products to you now. These new products allow people with smaller accounts to access the currency markets with an appropriate level of risk for the first time in history.

The New Products for New FX Traders

Each of the products I am introducing to you today were designed to be easy to trade — and small enough to be appropriate for new traders or people with smaller accounts.

EMicro FX Futures at the Chicago Mercantile Exchange

I love the new eMicro FX Futures at the CME — these are among the greatest products for a new trader I could imagine. Heck, the eMicro futures are great for experienced traders too.

Because they are futures products, they are extremely liquid. I think these products are going to continue to grow rapidly and that’s why I am beginning to use them in my trade alerts.

These eMicros are the perfect size for you if your account size is under $10,000. Remember, you can trade more than one contract. For example, if your account is $20,000, and you are taking 3% — or $600 worth — of risk on a single trade, then you may want to trade two or three contracts.

There are eMicro futures on the following currency pairs:

If you notice, these products are quoted the same as the cash market — even for the USD/JPY, USD/CAD and USD/CHF. This is great because it quotes the markets in prices we are used to seeing every day — it just makes it easier to trade!

These products all have similar specifications. Each pip (or tick) is about one U.S. dollar. This makes it easy to calculate your profit or loss with these contracts. If you have a 150-pip profit, then your profit will be close to $150.

To be able to trade these products, you will need a futures account.

FX Options on the ISE

I got started in the business working as a clerk in the S&P options — so you can imagine my excitement when FX options were finally launched. These new FX options from the ISE (International Securities Exchange) give access to the power of options — while limiting your downside. And because these are options, if you choose wisely, you can get incredible returns as market sentiment changes.

These contracts are extremely small! It is fantastic for those with a small account. I’ve been able to buy options for as little as $50 on the euro and the Australian dollar. When you buy options, your loss is limited to the amount you pay for those options. No more margin calls with these products.

The symbols to be able to trade these are:

For some brokers, these symbols may be considered to be indexes — like the .SPX for the S&P 500.

Please check with your individual broker for details on how to access these markets.

Editor’s Note: This article is just a highlight of an in-depth, 9-page report that Michael wrote for his Currency Profit Trader subscribers. Subscribers can access the full report online now. If you’re interested in learning more about Michael’s service, or about currency trading in general, you can find more information here.

Article brought to you by Taipan Publishing Group. Additional valuable content can be syndicated via our News RSS feed. Republish without charge. Required: Author attribution, links back to original content or www.taipanpublishinggroup.com.

{jtagstpg} {authorstpg}

Other Related Sources:

Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.

Great Britain published its unemployment rate this morning, revealing a 0.2% decline from 7.9% to 7.7% for the preceding month. The pound was trading lower, however, as the Claimant Count Change for April showed 12,000 more people filing for unemployment benefits than was expected.

While average hourly earnings was also up by 2.7% in Great Britain, usually indicating job growth, the claimant count figure superseded any potential bullishness expected out of the UK economy.

The British pound (GBP) has been moving downward against its currency rivals today, with the GBP/USD reaching as low as 1.6170 and the EUR/GBP climbing as high as 0.8806. Both of these major pairs appear to have momentum favoring GBP bearishness.

Continue reading “British Employment Sector Improving”

Following up after Monday’s home and automotive sales in Australia, this morning’s data from the land down under also revealed growing weakness. On the docket today was Westpac Banking Corporation’s consumer sentiment report and the Australian Bureau of Statistics’ wage price index.

Westpac’s sentiment report came with no expectations, which made its impact less felt in trading circles. The report measures the change in the level of a diffusion index based on surveyed consumers regarding past and future economic conditions. This month the index fell 1.3% in sentiment; a change from the previous month’s rise of 1.2%.

The Bureau of Statistics in Australia then published its wage price index an hour later at 2:30 GMT. The figure was expected to show 1.2% growth for April, beating out last month’s 1.0% reading. The actual result, however, was a muted growth of only 0.8%.

This data, coupled with Monday’s sales figures, has helped pull the Aussie (AUD) lower against most of its currency counterparts. Forex traders have witnessed the AUD/USD, as an example, pulling lower over the past several days with traders pricing in the weakened fundamentals. Just this morning, the pair moved from 1.0655 to its current price near 1.0600, with further bearishness being anticipated.

Read more forex trading news on our forex blog.

Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.

Source: ForexYard

The US dollar opened this week moderately stronger versus the euro Monday as traders continued last week’s shift into safer assets. As of late trading Monday, however, the EUR/USD pair shifted back into a bullish posture as traders turned their focus to the interest rate differentials between the Atlantic states. After briefly touching 1.4050, the pair found support and is currently moving towards 1.4300.

Economic News

USD – US Dollar Continues Yesterday’s Slide

The US dollar opened this week moderately stronger versus the euro Monday as traders continued last week’s shift into safer assets. As of late trading Monday, however, the EUR/USD pair shifted back into a bullish posture as traders turned their focus to the interest rate differentials between the Atlantic states. After briefly touching 1.4050, the pair found support and is currently moving towards 1.4300.

Soft economic data out of the American economy yesterday had many investors seeking market direction elsewhere. US housing and industrial figures for April came in lower than expectations and the capacity utilization rate was also in just below forecasts. Alternately, CPI figures from the euro zone Monday showed stable growth. This data together helped turn many investors’ attention back towards the interest rate differentials in the US and Europe, which caused a shift away from the greenback.

As for today, the euro zone will be absent as its ministers congregate for another meeting of the Economic and Financial Affairs Council (ECOFIN) in order to discuss the region’s finances. The US, on the other hand, is scheduled to release its crude oil inventory data and its Treasury currency report. If forex traders witness another day of soft data, the weakness of the USD in recent trading may become exacerbated as more traders shift into the higher yielding euro.

EUR – EUR Remains Bullish Despite Little News

The euro rose versus the US dollar for the second consecutive day yesterday, with the pair’s price reaching near 1.4280 as of this morning. Soft data out of the American economy Monday and yesterday forced a reevaluation by many investors who went long on the USD following the European Central Bank’s (ECB) cloudy rate statement two weeks back.

Yesterday’s significantly weaker fundamentals out of the American economy were only one part of the story, however. The euro zone published its consumer price index (CPI) inflationary reports which showed solid, stable growth, year-on-year. The core data also showed better growth than was expected. This combination of data from these two economic rivals generated a heightened intrigue in the comparative interest rates as risk sentiment got shifted. The result was for the interest rate bulls to outpace the debt woe bears in yesterday’s session, driving the EUR higher versus the USD.

As for today, the euro zone will be absent from the calendar as its ministers congregate for another meeting of the Economic and Financial Affairs Council (ECOFIN) in order to discuss the region’s finances. Hawkish statements could hint towards a tightening monetary policy in the near future, but traders should be wary of a return to risk aversion should the meeting produce less-than-stellar commentary. In the latter case, the EUR could see its bearishness return, especially since it has yet to outpace the strength of its regional rival, the Swiss franc (CHF).

JPY – JPY Remains in Consolidating Pattern

The Japanese yen (JPY) has been trading with somewhat mixed results since early last week, with gains made against several currencies and losses elsewhere. After a week of ups and downs, the Japanese yen appears set to make gains today as investors seek safety from recent turmoil and as the Bank of Japan (BOJ) published several reports yesterday morning which could help the island economy make gains. The dominant stance of risk aversion overarching last week’s trading environment has many traders moving towards the yen against the higher yielding currencies like the euro and British pound.

The USD/JPY was seen trading somewhat higher this morning, finding support near 80.70 and moving up towards 80.90 at today’s opening Asian sessions. Japan’s core machinery orders report was published this morning and revealed a modest uptick which may help the island currency in today’s market hours. Market news released out of the US today will likely be the driving force behind JPY values, though, and traders would be wise to watch the US crude oil inventories report as its correlation to investment growth has gotten stronger lately.

Oil – Crude Oil Prices Hold near $98

Oil prices fell below $98 a barrel yesterday morning, surprisingly after the euro took off against its primary rival, the US dollar. US oil stockpiles rose over 3 million barrels for the second week in a row last week, and forecasts for today’s oil inventories report is for another increase of approximately 1.4 million barrels. The sudden plummeting value of the dollar had many analysts assuming that oil would find support in this morning’s trading, and so far we’ve seen some stability after yesterday’s plunge.

Whether oil traders decide to lift oil prices back from this recent plunge is yet to be determined, especially considering the strangeness of the inverse relationship to the USD yesterday. The greenback’s decline may have a delayed effect today and oil traders may see the price bouncing back if that is the case.

Technical News

EUR/USD

The EUR/USD has gone bullish yesterday, and currently stands at the 1.4280 level. The daily chart’s Slow Stochastic supports the pair to rise further today. However, the 4-hour chart’s Williams Percent Range signals that a bearish reversal will take place today. Entering the pair when the signs are clearer seems to be the wise choice today.

GBP/USD

There is a bullish cross forming on the daily chart’s Slow Stochastic indicating a bullish correction might take place in the nearest future. The upward direction on RSI also supports this notion. Going long with tight stops might be the right strategy today.

USD/JPY

The pair has been range-trading for a while now, with no specific direction. The Daily chart’s Slow Stochastic is providing us with mixed signals. All oscillators on the 4 hour chart do not provide a clear direction as well. Waiting for a clearer sign on the hourlies might be a good strategy today.

USD/CHF

The cross has been dropping for the past 2 days now, as it now stands at the 0.8790 level. The Relative strength Index of the 4-hour chart is already floating in the oversold territory indicating that a bullish correction might take place in the nearest future. Going long with tight stops may turn out to be the right choice today.

The Wild Card

CAD/CHF

The pair has dropped significantly in the last two days and peaked at the 0.9050 level. However, on the 8-hour chart RSI is floating in an oversold territory suggests that a bullish correction is impending. This might be a great opportunity for forex traders to enter the trend at a very early stage.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Sterling is lower after an unexpected jump in UK unemployment claims while the unemployment rate surprisingly declined. As expected, meeting minutes from the Bank of England’s latest policy meeting showed the MPC is determined to hold interest rates at ultra-low levels in the near term.

A surprise jump in unemployment claims sent sterling lower versus both the dollar and the euro. New jobless claims rose by 12,400. The negative tone of the report was underscored as the previous month’s jobless claims were revised lower to 6,400 from 700. Economists had forecasted new claims of only 400. Despite the statistics office claims of a one off adjustment in the way the report is calculated may account for the increase in jobless claims, the negative data highlights the slow recovery the UK economy faces.

The unemployment rate surprisingly ticked lower to 7.9% from 7.8% on expectations of an increase to 7.9%. It is a bright spot on an otherwise bleak UK unemployment outlook.

At the same time the BoE released its last policy meeting minutes which showed the Monetary Policy Committee is still holding firm to its ultra-loose monetary policy. The MPC maintained its 6 to 3 vote in favor of holding UK interest rates at their present level of 0.5%. Earlier in the week BoE Governor Mervyn King announced that interest rates could begin to rise in Q3 but judging from the short sterling contract market players anticipate an interest rate increase closer to November. This is despite rising inflationary pressures in the UK. Yesterday inflation numbers were released and showed a 4.5% increase from the previous year.

Following the release of the unemployment claims report sterling traded lower versus both the dollar and the euro. The GBP/USD fell back to 1.6177 from 1.6268. A breach of 1.6150 would target 1.6050 from the rising trend line off of the May lows. Versus the euro the pound has lost all of yesterday’s gains booked after the inflationary data was released. The EUR/GBP traded as high as 0.8812, a level that coincides with the 50-day moving average. A close above this resistance would target 0.8940 below the previous trend line from the February low.

Read more forex trading news on our forex blog.